Security Post Would Put Kerik Atop Field That Enriched Him

By ERIC LIPTON

Published: December 10, 2004

Just five years ago, Bernard B. Kerik was facing lawsuits from a condominium association and bank over delinquent payments owed on a modest New Jersey condo he owned. Today, he is a multimillionaire as a result of a lucrative partnership with former Mayor Rudolph W. Giuliani and an even more profitable relationship with a stun-gun manufacturer.

If he is confirmed to the post of homeland security secretary, to which President Bush nominated him last week, he will oversee an enormous department that does business with some of the companies that helped make him wealthy.

The list of income sources that transformed Mr. Kerik, a former New York City police commissioner, into a wealthy man is a diverse one, including a best-selling autobiography, speeches around the United States and service on corporate boards. Mr. Kerik, who now lives in a large house in the decidedly more upscale New Jersey town of Franklin Lakes and drives a BMW sedan, even sold the right to make a feature film about his rags-to-riches life to Miramax, the film production company.

But it is the relationship Mr. Kerik has had since the spring of 2002 with Taser International, a Scottsdale, Ariz., manufacturer of stun guns, that has by far been the biggest source of his newfound wealth. That relationship has earned him more than $6.2 million in pretax profits through stock options he was granted and then sold, mostly in the last month. A White House spokesman said Mr. Kerik would resign from Taser's board and sell his remaining stock if confirmed.

Mr. Kerik benefited largely because the company's stock has surged extraordinarily. Stock options that were worth little when they were granted became extremely valuable, in part because of the sales pitch that Mr. Kerik made on the company's behalf to other police departments.

The sales driving Taser's growing profits are mostly to local and state governments. But while Mr. Kerik has served on the company's board, the company has made an aggressive push to enter markets either regulated or controlled by the federal government, most notably the Department of Homeland Security.

At one point, Mr. Kerik referred Taser executives, seeking more federal business, to a Customs and Border Protection official of the Homeland Security Department, according to the company president.

''Anyone in a federal law enforcement position is a potential customer,'' said Thomas Smith, president and co-founder of Taser International, who said he hired Mr. Kerik because of his prominence as the city's police commissioner. ''And we are going to continue to go after that business.''

Mr. Kerik declined, through a spokeswoman, to discuss his work for Taser. Although he is required for at least one year to recuse himself from decisions involving his former clients or partners, that will not prohibit the Homeland Security Department from doing business with those companies. A White House spokesman said Mr. Kerik would adhere to ''the highest ethical standards'' and ensure there are no conflicts of interest.

''In order to avoid even an appearance of a conflict, he will comply with all ethics laws and rules to avoid acts that might affect former clients or organizations where he served as a director,'' said the spokesman, Brian Besanceney.

Mr. Kerik had a close view of electroshock devices in the 1990's when he was commissioner of the New York City Department of Correction, which was looking for new tools to help it combat surging jail violence. After testing Taser guns as well as a stun shield sold by another company, the department chose the shield as better suited for prison use. But Mr. Kerik said the electroshock devices had impressed him as a way to subdue inmates without physically confronting them.

When he later became police commissioner, the Police Department initiated a pilot program testing new Taser models. The department eventually purchased about 260 of the stun guns.

In 2002, Taser International sought to significantly expand its sales to law enforcement agencies and it needed a high-profile former public official who could serve as a spokesman for its product, Mr. Smith said. Mr. Kerik, he added, was the perfect candidate, having served as both correction and police commissioner. Mr. Kerik's role working alongside Mayor Giuliani on Sept. 11, 2001, had also earned him a national reputation, particularly in law enforcement.

''We wanted someone who was recognizable to other chiefs around the country,'' Mr. Smith said in a telephone interview. ''And that is what we got with Bernie.''

After he joined Taser's board in May 2002, Mr. Kerik quickly became one of Taser's chief spokesmen before police officials.

''This trend is a dramatic change in law enforcement,'' Mr. Kerik wrote in an invitation sent to police chiefs nationally, referring to the use of stun guns. ''And one expected to grow.''

Mr. Kerik also defended Taser against criticism that its weapons had contributed to the deaths of suspects who have been fired upon by police. Amnesty International, the human rights organization, said there had been 74 Taser-related deaths in North America since 2001 and called for a suspension on the device's use until its safety was further investigated. An Air Force laboratory that conducted research on the guns said last month that it could not determine if they were safe, in contrast to statements from Taser that the lab had found its weapons generally safe and effective.